§ 36-6-101 — Terms of leases; extensions; lessees specified; rules and regulations; rent and royalties; assignment of leases; grazing and agricultural leases; cooperation with United States or its lessees, in cooperative or unit plans

(a) The board of land commissioners may lease any state or
state school lands for oil and gas for a primary term up to ten
(10) years and as long thereafter as oil or gas may be produced
in paying quantities, and may extend the term of existing oil
and gas leases in good standing for as long as oil or gas may be
produced in paying quantities.
(b) The board is further authorized to make and establish
rules and regulations governing the issuance of oil and gas,
coal and other mineral leases and covering the conduct of
development and mining operations.
(c) Mineral leases may be issued upon such monthly or
annual minimum rental payment basis as shall be fixed by the
board, which payment shall be annually applied against such
royalty as shall accrue for the same lease year by the terms of
such lease, which royalty, as to lands leased for oil or gas
shall not be less than five percent (5%) of all oil and gas
produced and saved from and not used in operations on the lands
under the lease, and royalty of not less than five cents ($.05)
per ton on coal produced from the lands under any such lease for
coal purposes, such royalty to be paid on mine run of coal. No
mineral lease issued under the provisions of this section shall
be assignable or transferable except with written consent of the
director, subject to criteria established by the board, and he
shall require the lessee's full compliance with and observance
of all rules and regulations adopted by the board and for the
lessee's compliance with all other terms of the lease. All
mineral leases issued pursuant to this section shall be separate
and distinct from each lease of the same land for grazing or
agricultural purposes, issued by the board, and rules and
regulations adopted by the board as herein authorized, shall
provide for joint use of such lands for grazing and agricultural
or mineral purposes without undue interference by the lessees
under any such class of leases with lessees under any other such
class.
(d) The director, subject to criteria established by the
board, on behalf of the state, and its lessee or lessees in any
such mineral lease are hereby further authorized to join, in the
interest of conservation and greater ultimate recovery of oil
and gas, in fair and equitable cooperative or unit plans of
development or operation of oil and gas pools, with the United
States government and its lessees, or permittees, or others, or
any of them, and the director, subject to criteria established
by the board, is hereby authorized to modify and change any and
all terms and conditions of any such oil and gas lease or
leases, heretofore or hereafter issued, as mutually agreed by
the lessor and lessee in any such lease, as required to conform
to the terms of any such lease to such cooperative or unit plan
and as required to effectuate proper operations thereunder,
which changes may include extension of the term of years
otherwise applicable to any such lease, for the full period of
time during which such cooperative or unit plan may remain in
effect.
(e) When a cooperative or unit agreement is terminated or
ceases to be effective as to lands upon which there is no
production of oil or gas, the lease covering such lands shall
remain in effect for a period of two (2) years from the date
such lands ceased to be subject to said agreement, or for the
remaining length of the term of the original lease, whichever
shall be the greater, and so long thereafter as oil or gas is
produced from said lands in accordance with the requirements of
the original lease.
(f) The terms of any lease issued under this section for
land on which actual drilling operations were commenced prior to
the end of its primary term and are being diligently prosecuted
at that time shall be extended for one (1) year and so long
thereafter as oil or gas is produced in paying quantities.
(g) All natural gas leases executed hereunder shall
provide that the state of Wyoming may require the lessee to
dedicate all the natural gas produced on lands owned by the
state for the use or benefit of the people of the state of
Wyoming.
(h) If the state board of land commissioners determines it
would benefit the people of the state to have the natural gas
dedicated, the board may arrange for the sale of the natural gas
for the use of the people of the state or arrange for the
exchange of the natural gas produced with producers of natural
gas produced from lands not owned by the state if the exchange
will benefit the people of the state. If the board determines
the dedication would not be in the public interest; or would
cause waste as defined by W.S. 30-5-101; or would unreasonably
deny the lessee the opportunity to economically market the
natural gas, it may waive dedication.
(j) The board shall adopt and promulgate necessary rules
and regulations to carry out the provisions of subsections (g),
(h) and (j) of this section.
(k) The board, on behalf of the state, and its lessee or
lessees in coal and other mineral leases, may approve
cooperative mining development plans established for the purpose
of development of the mineral resources in an efficient and
economical manner and in accordance with sound engineering
practice. The board may also modify and change any and all terms
and conditions of any coal and other mineral lease or leases,
heretofore or hereafter issued, as mutually agreed by the lessor
and lessee in the lease. The director, subject to criteria
established by the board, may conform the terms of the lease to
a cooperative mining development plan required to effectuate
proper operations, with changes that may include extension of
the term of years otherwise applicable to the lease, for the
full period of time during which the cooperative mining
development plan may remain in effect. A cooperative development
plan may consist of one (1) or more private, state or federal
leaseholds or mineral interests. All lands in a cooperative
mining development plan shall be under the effective control of
a single operator, capable of being developed and operated as a
single operation.
(m) The director, subject to criteria established by the
board, may lease any state or state school lands for coal and
other mineral purposes for a primary term of not exceeding ten
(10) years. Lessee shall have the exclusive right to renew the
lease for successive terms of ten (10) years each, if at the
time application for renewal is filed:
(i) Coal or other minerals covered by the lease are
actually being produced from the leased lands and the lessee is
complying with all lease terms; or
(ii) The leased lands are committed to a cooperative
mining development plan approved by the board and coal or other
minerals are actually being produced from the cooperative mining
development plan and the lessee is complying with the plan and
all lease terms; or
(iii) The lessee is proceeding in good faith to
develop the leased lands; or
(iv) If the lessee shows to the satisfaction of the
director or the board that production of coal or other minerals
has been delayed by the necessity of obtaining licenses,
permits, or other approvals from governmental authorities and
that the lessee has used reasonable diligence in an effort to
obtain the licenses, permits or other required authorizations.
(n) As used in subsection (m) of this section, good faith
development means the substantial expenditures or firm
commitments for exploration, engineering, environmental studies,
hydrological studies or research and development which is
required for development of the lease. To assist the lessee in
planning for the orderly development of the lease or leases, the
lessee may submit to the board at any time during the term of
the lease or leases a schedule and discussion of proposed
expenditures or commitments for the development of the lease or
leases. After reviewing the schedule and discussion, the board
shall issue a ruling in writing within ninety (90) days binding
upon the state and the lessee, determining whether or not the
proposed expenditures or commitments, when and if actually made
by lessee, shall qualify as "substantial expenditures or
commitments" so as to constitute "good faith development" within
the meaning of subsection (m) of this section.
(o) Any mineral lessee or producer shall report all
production including total volume, value and disposition of the
mineral production under any lease, unit or communitization
agreement in a timely manner and in such form as determined by
the board. Any person failing to comply with this subsection
shall be subject to penalties enacted by the board or the
cancellation of the lease or agreement under which they are
operating.
(p) Before issuing a lease of any state lands or state
school lands for oil and gas production under this article, the
director, subject to criteria established by the board, shall
review the highest bid offered by an applicant to determine if
the applicant is a qualified oil and gas lease applicant in
accordance with rules of the board. If the highest bidder is not
a qualified bidder, then the board shall consider the second
highest bidder to determine whether that bidder is a qualified
applicant, upon which the board may issue the lease if the
applicant agrees to lease the lands for the highest amount bid
before the disqualified applicant entered the lease auction or
process or for the amount that the second highest bidder bid,
whichever is lower. Any applicant whose bid is rejected under
this subsection because the applicant is not a qualified oil and
gas lease applicant shall be subject to a civil penalty in the
amount of the applicant's highest bid. The attorney general may
bring an action in a court of competent jurisdiction to recover
the penalty specified in this subsection from the applicant.